CMQ announces details of private placement financing and extension of forbearance

    




 /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR  DISSEMINATION IN THE UNITED STATES/ 

 CALGARY, Oct. 19, 2011 /CNW/ - CMQ Resources Inc.  ("CMQ") announced today that it intends to complete a private placement (the  "Offering") of approximately $1,500,000 principal amount of secured convertible  debentures to Matco Investments Ltd. ("Matco"), CMQ's principal creditor and shareholder and a control person of  CMQ. 

 The Offering will consist of the issuance of $1,500,000 principal amount  of convertible debentures (the "Debentures") secured against all present and after acquired property of CMQ on  similar terms to CMQ's existing secured indebtedness owing to Matco.   The Debentures shall have a maturity date of October 15, 2013 and bear  interest at a rate equal to 9% per annum.  The accrued principal and  interest amounts owing on the Debentures shall be convertible, at  Matco's election, into common shares of CMQ at a price equal to $0.10  per common share.  It is currently anticipated that Matco will be the  only subscriber to the Offering.  Matco and related persons currently  hold 22,094,141 common shares of CMQ, representing 49.99% of CMQ's  outstanding common shares and would hold 37,094,141 common shares of  CMQ, representing 63% of CMQ's outstanding common shares if the full  principal amount of the Debentures were to be converted. 

 In CMQ's information circular relating to the annual and special meeting  of shareholders of CMQ held on June 21, 2011 (the "Meeting"), CMQ disclosed that it intended to enter into a future financing  which may involve Matco acquiring up to 90% of the issued and  outstanding shares of the Corporation.  At the Meeting, shareholders of  CMQ approved, both on a majority basis and on a "majority of the  minority" basis, a resolution approving such financing and Matco's  participation therein to become a de facto control person of CMQ in accordance with Multilateral Instrument 61-101 ("MI 61-101").  In connection with the Offering, CMQ is relying upon the exemption  set forth in section 5.5(c) of MI 61-101 which allows an issuer to  forego receiving a formal valuation in respect of a related party  transaction.  There have been no prior valuations of CMQ, its material  assets or its securities made in the twenty four months preceding the  date hereof. 

 On December 19, 2010, CMQ entered into a funding and forbearance  agreement with Matco, pursuant to which Matco agreed that it would, for  a period ending on October 19, 2011, forbear from enforcing its rights  and remedies against the Corporation (the "Forbearance") in respect of substantially all amounts CMQ was indebted to Matco.   In connection with the Offering, CMQ and Matco have entered into an  agreement to extend the Forbearance previously granted by Matco to May  30, 2012, conditional on completion of the Offering on or prior to  November 30, 2011, and for no additional consideration. 

 The net proceeds of the Offering will be used principally for working  capital purposes. 

 The terms of the Offering and the extended forbearance were negotiated  between Matco and an independent committee of CMQ's board of directors  consisting of independent directors of CMQ, free from any interest in  the Offering, which has recommended proceeding with the Offering and  forbearance extension.  The completion of the Offering remains subject  to receipt of all required regulatory approvals not previously  obtained, including that of the TSX Venture Exchange. 

 This press release is not an offer to sell securities in the United  States.  Securities may not be offered or sold in the United States in  the absence of registration or an exemption from registration. 

 The Exchange does not accept responsibility for the adequacy or accuracy  of this release. 

 Forward-Looking Statements 

 This press release contains certain forward-looking statements and  forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of Canadian securities laws including with respect  to the timing, completion of and terms of the Offering. All statements  other than statements of historical fact are forward-looking  statements. Forward-looking statements typically contain statements  with words such as "anticipate", "believe", "plan", "continuous",  "estimate", "expect", "intend", "may", "will", "shall", "project",  "would", "should", or similar words suggesting future outcomes. 

 Undue reliance should not be placed on forward-looking statements, which  are inherently uncertain, are based on estimates and assumptions, and  are subject to known and unknown risks and uncertainties (both general  and specific) that contribute to the possibility that the future events  or circumstances contemplated by the forward-looking statements will  not occur. There can be no assurance that the plans, intentions or  expectations upon which forward-looking statements are based will in  fact be realized. Actual results will differ, and the difference may be  material and adverse to CMQ and shareholders. Forward-looking  statements are based on management's current beliefs as well as  assumptions made by, and information currently available to,  management. Though management considers these assumptions to be  reasonable based on information currently available to it, they may  prove to be incorrect. By their very nature, forward-looking statements  involve inherent risks and uncertainties, both general and specific,  and risks that forward-looking statements will not be achieved. The  forward-looking statements contained in this press release are made as  of the date hereof and CMQ does not undertake any obligation to update  publicly or to revise any of the included forward-looking statements,  except as required by applicable law. The forward-looking statements  contained herein are expressly qualified by this cautionary statement. 

CMQ Resources Inc.


CONTACT:  Ryan Jennings, Corporate Secretary, CMQ Resources Inc., Tel:[phone] 


    

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